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Legislative Steps in the Pro-patent Direction

New patent legislation would rectify some of the damage done by several court rulings and by Congress. It would reestablish the fundamental constitutional principle that a U.S. patent secures certain rights in private property.

The Innovation Alliance, comprised of R&D-based innovator companies in various industry sectors, praised the legislation in a statement. A blog from George Mason University’s Center for the Protection of Intellectual Property discussed the bill and the need for it. Conservatives for Property Rights tweeted its support for Massie’s and Kaptur’s bill.

The Massie-Kaptur bill’s Section 2 gives findings, stating that the U.S. government’s job is the protection of life, liberty and property, that this includes intellectual property, and a patent secures the inventor’s private property rights.

This is important to put in legislation because the U.S. solicitor general and the Patent and Trademark Office under Director Michelle Lee and Acting Director Joe Matal have advocated that patents secure nothing more than “public rights.” That theory degrades the property rights in an invention, which as any grade schooler can figure out, is a form of property that didn’t exist until the inventor created it. There’s nothing “public” about the new property or the rights to it. RALIA makes this simple proposition clear.

Section 3 restores the first-to-invent standard and ditches first-to-file, and restores the pre-America Invents Act one-year grace period before an inventor must apply for a patent. The first-to-invent basis for awarding a patent lines up with the language of our original patent law, the “first and true inventor.” It democratizes American patents — if you invented it, it inherently belongs to you and thus you should get the patent.

The first-to-file standard has diminished exclusive rights, particularly for independent inventors, and adversely “impacted collaboration among research groups,” Industry Week reports. IEEE-USA notes the “greatly increased uncertainty,” which tends to scare off investors.

A meaningful grace period is important. Before AIA, inventors had one year from first public disclosure or sale before they had to file for a patent. This enabled inventors to discuss the invention with potential investors, work with others on perfecting the design and test and improve the invention before putting in paperwork at the PTO.

Since AIA, “The grace period is so limited that inventors would be better served to consider the grace period as nonexistent, or perhaps only available to possibly fix an unfortunate mistake,” says Gene Quinn.

Coupled with AIA’s basing prior art on “effective filing date” of an invention anywhere in the world, the interaction with the first-to-file standard and the loss of the grace period hurts innovation and the ability to reduce an invention to practice without risk and greater cost.

Section 4 repeals AIA’s provisions that established inter partes review and postgrant proceedings, where the Patent Trial and Appeal Board invalidates patents at rates considerably higher than in federal court — about 80 percent of patent claims are cancelled at PTAB versus about 30 percent in an Article III court. Around 87 percent of challenged patents get hauled before both a real court and PTAB. Faster, better, cheaper it’s not.

There’s a strong argument for doing away with PTAB’s reviews. The due process and judicial standards at PTAB include zero standing requirements that would keep out speculators and mischief makers, allow adversaries to pursue repeated challenges against the same patents (even those a federal court has previously upheld), lower standard of proof, loosey-goosey evidentiary standards, a far broader standard of claim construction and worse. If PTAB reviews essentially duplicate Article III courts, but without the fairness protections and certainty once a case is decided, then get rid of the extraneous forums. That’s what RALIA does.

Section 5 abolishes PTAB and revives the former pre-AIA Board of Patent Appeals and Interferences. This removes the oppositional administrative nightmare AIA set up and restores the means for inventors to work with PTO in case patent examination ended in denial of a patent. BPAI could invalidate a patent only in ex parte reexamination. The patent owner could appeal that invalidation determination to the Federal Circuit (a federal court with patent expertise).

This provision of RALIA complements Section 4. There’s need for the administrative function BPAI formerly fulfilled. Ex parte reexams from 1981 to 2016 saw a much more reasonable set of outcomes. Of the 10,979 accepted ex parte petitions, only 12 percent saw all of a patent’s claims cancelled — much fairer and exceedingly more reasonable than AIA IPRs’ 65 percent cancellation of all of a patent’s claims. Two-thirds of patents in pre-AIA ex parte reexams saw some claims confirmed and 21 percent of patents had all their claims confirmed. A return to reviewing patents in examinations, with opportunity to amend claims, promotes better patent quality, greater ability to benefit from the right of exclusivity and a quieting of title that’s sorely missing post-AIA.

Section 6 ensures full funding of PTO. Under federal budget constraints known as sequestration, part of fees paid to agencies, including the PTO, gets siphoned off to the U.S. treasury. Ending fee diversion from PTO has enjoyed broad support (except by Congress’s appropriators). These are user fees, not general tax revenue. Full funding of the PTO promotes faster patent examination and higher patent quality. This is especially important when the patent term starts upon patent application, rather than the former start upon patent issuance.

Section 7 restores patentable subject matter as it was before the Supreme Court messed things up. This provision clarifies that any threshold assessment of whether a claimed invention is patent-eligible would result in patentability unless it “exists in nature independently of and prior to any human activity, or exists solely in the human mind.” The bill says that 35 U.S.C. Sec. 101 patentability determinations must be made independent of novelty, usefulness and obviousness, as well as beyond the claimed invention’s “inventive concept.”

This measure also corrects the court’s errant opinions in Alice Corp. v. CLS Bank and Bilski v. Kappos, which have disrupted software patentability. Software is in pretty much everything from automobiles to medical devices to ATM machines to microchips. Protecting the software code by copyright doesn’t do the job; you need a patent to protect the function or process that the software accomplishes.

Section 8 repeals the AIA provisions that specify grounds for novelty of an invention, restoring the pre-AIA 35 U.S.C. Sec. 102. This part of the Massie-Kaptur bill adds language that prohibits any information shared with the PTO about an invention from becoming prior art unless and until a patent is issued.

Which leads to Section 9. Added to Title 35 is a provision clarifying and strengthening — and faithfully reflecting the language of the Constitution — that a patent secures a private property right in an invention or discovery. The measure restores the right to be heard in an Article III court, just as the Fifth and Seventh Amendments guarantee. This measure is badly needed in light of the errant ruling in Oil States that relegates patent rights to nothing more than being considered a “public franchise.”

This section also fixes the thrust of Impression Products v. Lexmark International, which disrupted conditions a patent owner can place on licensees regarding postsale use or resale. The Lexmark opinion has adverse implications for patent licensing and assignment along with the longstanding ability to pursue patent infringement over disallowed aftermarket conduct or practices. Lexmark weakens patent rights, reduces patent values and diminishes the right to exclude. This provision revives these patent rights.

Section 10 ends the automatic publication of U.S. patent applications 18 months after being filed. This measure complements Section 8’s confidentiality requirements regarding prepatent inventions. As Pat Choate and Joan Maginnis report, automatic publication can have the unfortunate effect of disclosing inventions before patent examination is completed. Automatic publication harms U.S. competitiveness by giving the Chinese and other intellectual property thieves a head start developing a market for an applied for, but as yet unpatented new invention. A prepatent published application can risk rendering the invention no longer novel.

Section 11 of RALIA strengthens the statutory presumption of validity of an issued U.S. patent. This presumption applies in any federal or state venue. It applies to each patent claim regardless of whether it depends on another claim. Thus, an invalid claim won’t automatically cancel other dependent claims; each one must be assessed on its own merits and each one afforded the validity presumption. The bill clarifies that the person asserting patent invalidity bears the burden of proof, against the patent or any challenged patent claim. The challenger has to prove invalidity by a clear and convincing evidence standard— the standard level of proof in other property cases.

These measures set forth clear, simple elements that make it harder to invalidate an issued patent. It would reverse the easy patent cancellation seen in the age of PTAB and get the Federal Circuit straightened out. The combination of strong presumption on the whole and of each part, accompanied by the challenger carrying the burden of proof at every level, should help protect intellectual property rights against gamesmanship and expensive legal tactics employed as weapons rather than legitimate legal settling of a fact dispute.

This section creates a new protection of patent property rights. Under RALIA, the term of a challenged patent halts for as long as a patent validity case goes on. It’s like stopping the clock in basketball for the foul shots.

Section 12 rebuffs the eBay v. MercExchange ruling that makes it near-impossible to get a permanent injunction against a patent infringer. This bill directs courts to presume irreparable harm by patent infringement. The presumption is rebuttable by clear and convincing evidence. All patent owners, whether or not they make or sell their patented product, and exclusive licensees obtain this return to pre-eBay injunctive relief.

The eBay court took away the ability to stop an infringer from continuing to make, sell or use a patented invention. The only recourse patent owners now have is to try to get a licensing agreement. But what’s the leverage to force infringers to the bargaining table? And if they do negotiate, infringers have leverage to underpay what the invention’s worth. This erases the right to exclude that a patent’s supposed to give.

Section 13 restores the pre-AIA best mode requirement. Patent applicants again have to disclose the “preferred embodiment” of the invention, the best way that the invention should be reduced to practice. This requires the inventor to commit to the single-best means of carrying out the invention. It’s an important part of the patent bargain — full disclosure of the metes and bounds as the inventor intends them.

In conclusion, like the STRONGER Patents Act, RALIA seeks to change the direction of our slipping patent system. This bill simply takes a few more steps in the new direction. It’s premised on private property rights and secure rights in one’s inventions, restoring the certainty, enforceability and reliability of a U.S. patent. These reforms would be highly constructive.

The Author

James Edwards
consults on intellectual property, health care innovation, and regulatory and policy issues. Edwards advises companies, trade associations, and conservative organizations on patent policy and is Co-Director of the Inventor's Project. He participates in the Medical Device Manufacturers Association's Patent Working Group. Edwards mentors start-ups and early-stage companies, largely in the med tech space, and is involved in several IP-centric projects.

Edwards served as Legislative Director to Rep. Ed Bryant, R-Tenn., then a member of the U.S. House Judiciary Committee, and handled IP legislative matters. Edwards also worked on the staffs of Rep. John Duncan, R-Tenn., the U.S. Senate Judiciary Committee, and Sen. Strom Thurmond, R-S.C. In addition, he was an association executive at the Healthcare Leadership Council. Edwards earned a Ph.D. at the University of Tennessee, and bachelor's and master's degrees at the University of Georgia.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 22 Comments comments.

David SteinJuly 8, 2018 12:11 pm

It goes without saying that section 101 has been rendered irredeemable by the courts. David Kappos nailed it shortly after Alice: every legitimate 101 rejection can be reformulated as a rejection under 102, 103, or 112 (two of which are based on evidence). In the meantime – as long as examiners and (more importantly) the PTAB take Berkheimer and Aatrix seriously, the era of rampant overuse of 101 may be over.

However, I don’t understand or agree with the push to restore first-to-invent priority, for two reasons.

First: I understand the narrative that first-to-invent provides a modicum of fairness to small inventors who can’t afford to “file early, file often.” But it’s my udnderstanding that the number of interferences in which a junior party (the one that filed later) successfully demonstrated earlier invention were *vanishingly* small – like, one every few years. I’m not an advocate of clinging to ineffective or rarely applicable legal and administrative complexity for sentimental reasons.

Second: First-to-file has a number of clear advantages in simplifying priority determinations and harmonizing U.S. patent law with the entire rest of the world. I don’t believe that it is a good thing for one party to hold patent rights solely within the U.S., and another party to hold patent rights to the same invention everywhere else, simply because of a jarring legal inconsistency.

I’m certainly open to reconsidering my position, but I need some pretty compelling arguments as food for thought.

Jason LeeJuly 8, 2018 1:38 pm

We all now this bill has ZERO chance in passing, and we also know they can not and will not pass anything pro patent, Google, Amazon, Microsoft, Facebook have the Senate and House in the back of their pockets. Silicon Valley elites own the vote. Large Silicon Valley companies no longer have to pay for a patent license from a patent holder thanks to the AIA Act and the PTAB that helped them kill any rights a patent holder had in getting paid. Patent Theft is free of charge for the big boys. Smart patent holders are now starting to look to Europe and China as they still have a little more balance to help small patent holders protect their IP. Patent rights and penalty rewards for infringement on a IP are dead in the United States for small inventors and Universities.

Jianqing WuJuly 8, 2018 3:07 pm

All of them changes must be made to ensure the nation will continue standing in the technological front. Looking back to the first 130 years of the U.S. patent system, a strong patent law should have all of those basic elements. The only thing that is missing is to reducing or canceling maintenance fees (which was introduced around 80). I have found that many small inventors end up with paying too much fees and fail to realize the values of their inventions. The massive number of patent expired in each week. The second point missing is the mental steps doctrine. I found that mental step doctrine is absolutely responsible for the failure of medicine or the era of incurable diseases. It powerfully precludes meaningful research, inventing and commercializing activities in the mind-and-body model which is the only model under which cures to incurable diseases can be found.

It is really sad for the nation to go through this long process to experience what it should not. If we look at the anti-patent history, anyone should be able to predict the end result without experiencing it. Every nation eventually restored its patent system. Each anti-patent movement in every important nation resulted in damages to national economy.

The damages the U.S. suffered are very unique: it has lost a great deal of the existing lead in technology in such a short time when all big nations intensely fight to win in technology. I really hope someone will do a comprehensive study to figure out how many years the U.S. has lost in maintaining its technological leadership. Many Asian nations have gained great deals of advantages in future trades. The adverse impacts will be seen or realized in five, ten, twenty, and even longer time!

Legislative restriction on the U.S. Supreme Court is long overdue. From the justice composition and its infrastructure, I must say that it should not answer any patent policy question. Problems can be seen from some early decisions before the new deal. When individual judges and justices can MAKE patent laws piece by piece, such a court system is incapable of achieving a reasonable balance within the patent system.

To have the bill passed, one major task is educating ordinary citizens and voters. Due to misleading stories, most lay people do not understand real problems. Many of them might have been misled to think that inventors are just like “patent trolls,” as described in millions of articles. The media have played a worst role in bringing in this national disaster, and it will continue doing such things without knowing how its effort will further damage national long-term interest.

beleaguered inventorJuly 8, 2018 3:25 pm

Is any thought being given to getting rid of Term adjustments and returning to the fixed Term of 17 years from date of issue vs 20 years from date of filing? Many of us small inventors have seen our patent Terms evaporate, as we attempt to cautiously license our inventions while dodging potential IPRs. A return to the former practice would help monetize inventions while the marketplace is most receptive.

Jianqing WuJuly 8, 2018 3:44 pm

David Stein at 1.

I would not use RESULT to evaluate the impacts of such a rule. It will discourage small inventors from even trying. Moreover, true impact cannot be assessed by looking at actual data. If small inventors think that they just have no time to do it or lose priority, they just give up many and many attempts (even though they do not know whether they will lose 8h any priority loss). This may be one of many reasons for the “do not bother patent” culture. The policy might preclude many disruptive inventions (which do not have priority issues).

David Stein at 2.

International order may be good if there is no incentive to win in competition. First to file is clearly encouraging corporate inventions (actually corporate product improvements). It is not a good policy for encouraging disruptive technologies. However, the U.S. was historically a nation for bringing in disruptive technologies. Why should the U.S. give up this unique culture by following the international order. Most other nations have no ability to lead technology so they can just follow the international standard. China is very creative in encouraging its people to invent. In just 30 years, it has achieved no other nations could. But, it does not know all policy issues. I would not be surprised if it changes this rule.

Inventions cannot be evaluated by counting numbers. If one counts invention numbers, one might find that none of the bad laws and court rules has real adverse impacts. The reality is that the U.S. innovation culture has changed from everyone-would-try to nobody-wants-to-bother. The USPTO data is extremely bad! U.S. invention compositions are very bad, too.

Software InventorJuly 8, 2018 11:48 pm

H.R. 6264 is red, white and blue and American pie as it comes. Let’s rally our majority of congress and senate members that represent independent inventor constituents to support this proposal. Maybe some amendments will come yet the majority of the bill sections and their present wording restores the American ideals to our patent system, ensuring the prosperity of our economy and our future.

Certainly some in of the anti-patent members will remain faithful to the dominance and allure of big tech and their lobbyists. Yet their dominance is not wise to entrust your political careers. HAL did not go away, his sisters evolved…they’re listening in your offices right now. Ever present, ever vigilant. Remember, don’t ever cross HAL.

David SteinJuly 9, 2018 3:04 am

Jianqing: Very astute comments. Thank you for your contribution.

Mark NowotarskiJuly 9, 2018 12:17 pm

David Stein @1,

I agree, 101 restoration must be the top priority. Don’t kid yourself, however, on “the era of rampant overuse of 101 may be over.” It’s spreading and getting firmly entrenched throughout all of the software classes (i.e. the 700’s).

TernaryJuly 9, 2018 12:40 pm

I support H.R. 6264 and I will contact my state’s House Representatives to urge them to get this Bill to the floor and to support it.

It is sad to have to ask to turn back the clock. But it has become clear that the AIA and recent Court Decisions have been a huge disadvantage to independent inventors and is affecting and dispiriting a once powerful source in America’s innovation economy.

CuriousJuly 9, 2018 12:54 pm

David at 1, Wu @ 2. I am in David’s camp. The “first to invent” debate invokes bogeyman that I have yet to encounter in many, many years of practicing.

angry dudeJuly 9, 2018 1:53 pm

The doc said ‘to the morgue’ – to the morgue it is!

RobertJuly 9, 2018 2:16 pm

My comments are directed to section 4 of H.R. 6264.

IPRs demonstrate ineffective fact finding from the very start. Regardless whether a patent is a public right or individual right who losses when there is strong post issue enforcement while simultaneously having weak pre-examination prior art fact finding? The Presumption of Validity is predicated on the strength of the evidence before the examiner and IPRs time and again reveal deficient prior art fact finding. The AIA did not, nor does the Stronger Patents Act or the Restoring America’s Leadership in Innovation Act, address the root-cause of the problem. Fix the initial fact finding process and IPRs will go away because it won’t be so easy to find new evidence.

Mark NowotarskiJuly 9, 2018 2:54 pm

I agree with Curious @10. First to invent is a non-issue for my clients.

DisappointedJuly 9, 2018 5:34 pm

101 rejections remain out of control even after Berkheimer and the USPTO memo. Examiner admits court cases are not on the subject matter, only similar. Examiner refuses to acknowledge or address hard factual evidence from the relevant field that proves claims are not routine, well understood or conventional in the relevant art. No expert or day to day professionals even do the claims now, or in the past and the evidence proves it.

There appears to be no rule of law.

TimJuly 9, 2018 6:07 pm

This should go back to every case that was overturned by “dirty” judges that looked out for Obama’s Google team and the others: VRINGO vs IP INTERNET. A 12-man jury sided with Vringo 12-0 against Google, AOL, Gannett and Target on infringement on every single count, “however” Google told the others that they would take it to the Appeals Court. 2 judges, Mayer & Wallach “didn’t see it” and tossed the court trial. The other judge, Chen, who had been the head of the USPTO before Michelle Lee, and was the only one of the 3 with any computer understanding and degree, “highly” dissented! Then David Buies Esq., took the case to the US Supreme Court, and the court wouldn’t even look at the case. United States of Google/Obama in full force. We shareholders lost our life savings, and this case need’s to be righted! At the time of the trial, Google stock was over $400 a share. Vringo was $2.00, and went to $5.00. It collapsed and did a reverse split, 10-1. Now XSPA (formerly Vringo) is about $0.25 a share! This need’s to be overturned!

TernaryJuly 9, 2018 9:44 pm

First-to-invent goes back to the original intent of the patent system: the inventor who first does the invention should own it. First-to-file is to assist corporate filers. Combined with the grace period, the first-to-invent approach recognizes that an inventor is not always aware that she has developed a valuable invention and is provided with a reasonable window to obtain protection, even after talking to others about the invention.

In the scheme of things, the first-to-file issue seems to be a minor one. But it was used to support opponents of a strong patent system to argue that the US system was outdated and needed to “harmonize” with the “much better” European system. The European patent system, of course, being an outrageously expensive “corporate patent system” by design and execution and unable to assist launching of any major new industry by independent inventors.

Support H.R. 6264.

TimJuly 10, 2018 8:47 am

Again, as you mention: The inventor of the adwords program was Andrew Lang, who at the time, worked for Lycos. Google, and many others could have purchased the patent, but decided that they didn’t need to. Vringo purchased the patent and had also hired Lang. Lang spent many days in Judge Jackson’s Norfolk Court, and the defense did all they could to stall. I believe they made the Patent Office check the patent 5 times. And every time it was in Vringo’s favor. Mayer and Wallach should have never been able to overturn that case!

The whole problem with KSR and Alice is that they aren’t really laws. What they are is equity where any fact finder worth their salt can decide a case either way. So there is no predicability (except maybe if you are a small company suing a large company, your patent claims will be invalidated by the CAFC.)

I think the reforms should include KSR. Go back to TSM or something besides if you feel like finding it obvious here is a set of tools that will make it easy to justify making it obvious.

Night WriterJuly 10, 2018 11:10 am

I remember the adword patents. Back in another life they were offered to me to buy. I remember that there were lots of people that ridiculed the patents and said that the adword idea would not work or didn’t fit in with the current models.

I recommend the company I was with buy the adword patents, but the person who made the decision ridiculed the idea and said it would never catch on.

angry dudeJuly 10, 2018 2:26 pm

Night Writer @19

Dude,

You sound like those big corps ever bought patents from small entities even on tech that was published in IEEE journals and proceedings, thoroughly checked by peers and implemented in perfectly working demos

Why buy when you can just use it without ever paying a dime ?

Let those suckers figure out all the tricky details, then just steal wholesale

It was like this for over 12 years

Sigh…

BennyJuly 11, 2018 2:05 am

Angry,
Wikipedia has a list of about 200 tech companies bought by Google/Alphabet. That means buying their IP, too. Why buy a single patent when you can buy the whole portfolio? Let the suckers figure out the details of what to do with the profits from their work after selling the startup…it was like this for over 12 years.

ZachAugust 3, 2018 10:03 pm

Patents were designed the way they were so that they would reward the creator (not the buyer or monopolizer) of intellectual property while ensuring that discovery went eventually back into the public domain, where it most often does the most good. The industrial revolution would have happened hundreds of years before if this system was not invented, where the discovery of steel had to be reinvented many times do to trade secret dying with the family. Our patent system has been corrupted by first to file and corporations routinely abusing the legitimacy of this system using technology obfuscation and trade secrets. This hurt everyone in the long run. We need a taxpayer funded public body that richly rewards and incentivizes inventors and buys out patents of valuable technologies to place them directly into the public domain, where they will do the most good for society. We will become much more wealthy and technologically advanced if we prevent further monopolization and private ownership of our intellectual heritage. There is still plenty of money for companies to make if they compete fairly at what they do best, making and marketing a product, not owning intellectual property created often by someone else. Trade secrets and technology obfuscation should be recognized for what they already are, illegal and illegitimate, as these practices are only used as loopholes to skirt time-limited patent laws and regulations keeping the public safe. We will enter a state of technological feudalism otherwise, and countries with more lax laws and open source development like India and China will pass us up in 20 years if we continue down this myopic path.

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